PERS: Take that winding road toward reform

Friday, January 4, 2013

Local government, public education and state agency budgets are stretched thin, and everyone realizes that one solution involves reform of Oregon’s Public Employee Retirement System. Turning that perception into reality may be a long and winding legislative road, but a road well worth taking.

Two years ago, unions provided the funding and foot soldiers to put Democrat John Kitzhaber over the top in a tight, hard-fought battle with Republican Chris Dudley. And public employee unions led the way.

This year, Democrats retained a majority in the Oregon Senate and seized control of the House, giving Kitzhaber his first-ever taste of full party sway. Once again, public employee unions were key political players.

With that background, our expectations for meaningful PERS reform didn’t exactly soar with Kitzhaber’s call to action in an address to the Oregon School Boards Association in November. Still, if anyone can pull off such a feat, it’s John Kitzhaber.

The governor has greater legislative and leadership skills than those of his recent predecessors. He is a master at finding common ground and drawing others to it, from all sides of political, social, environmental and yes, labor-management divides.

Kitzhaber also has plenty of solid backing on this issue. There is growing recognition in the Oregon business community and among Oregonians in general that PERS excesses have decimated public budgets and that reform is a must.

Both the governor and his working majorities in the House and Senate are beholden to public employee unions. That was evident in Kitzhaber’s opening salvo of the campaign, at least to those who understand the enormity of the PERS challenge.

PERS is a multi-headed beast, and Kitzhaber is proposing to lop off a few of those menacing heads. If that’s the best we can manage, some will say, we’ll take what we can get and be grateful for the governor’s leadership. But it’s not enough.

Oregonians thought the PERS reforms of 2003 would solve the crisis, but far from it. Some of those changes were rejected through subsequent legal challenges, while other reforms simply failed to stem the practices that most contribute to the PERS problems.

Proponents of reform agree that public employee retirement payments must be fair and sustainable, and that challenges to the system must withstand legal challenge. Leaders have clearly identified key areas of reform needed to reverse disturbing PERS financial trends, with more finely tuned details to come.

Make no mistake, there is a huge problem. The PERS board acknowledges an underfunded liability of $16 billion, while an independent worst-case-scenario study says the shortfall is $90 billion. Widespread teacher layoffs and public service cutbacks attest to the immediate impact, and there’s no end in sight without reforms.

Some will assess the political landscape and settle for the best we can get. We urge Oregonians to resist half-way measures, and to join the growing chorus of voices that see 2013 as an opportune time to cut through the rhetoric and make the critical decisions needed to stabilize public budgets.